Set to take effect in 2018, the Cadillac tax is a punitive 40 percent non-deductible excise tax on the cost of employer-sponsored health coverage that exceeds predetermined threshold amounts, currently $10,200 for individual coverage and $27,500 for family coverage. Clearly this tax is intended to disincentivize employers from providing these high-cost (hence, “Cadillac”) plans. But the question is, how will employers respond?

If these plans are taxed once a certain threshold is reached, then aren’t employers incentivized to cut the benefit? Essentially, visiting the doctor is being punished because those who are more likely to see a physician are the ones who have a plan that provides coverage. And with health care spending increasing year after year, it is probable that more individuals will start to exceed the preset premiums threshold. However, preventive health care may be able to mitigate the burden of this tax without forcing employers to cut benefits.

Research studies have demonstrated that effective preventive health care specifically designed for the early detection of health conditions and risks and effective management of chronic disease conditions can reduce the health care cost burden of employers and employees, thereby side-stepping the Cadillac tax. Preventive health care rewards individuals who take the time to maintain their health by keeping them from getting sick. And indeed, PPACA mandates that health plans cover a set of preventive services. In other words, you can either spend a little now or a lot more later.

When companies proactively promote employee health, they increase productivity; reduce absenteeism and its cousin, “presenteeism” (going to work despite being sick, which risks infecting others); and reduce costs. Moreover, healthier employees are less likely to use vacation time owing to illness and or to miss work caring for ill family members who also benefit from the health-promotion initiatives. This proactive approach brings to mind the old adage “A stitch in time saves nine.”

Companies that spend more on preventive services — routine, age-specific prescreening exams, travel medicine, health coaching, and behavioral modification programs that ‘nudge’ employees to seek recommended follow-up treatments (e.g., dermatological screenings) — should be encouraged to do more of this type of health care. While incorporating a comprehensive preventive health care plan may increase short-term costs, it will reap long-term returns in the form of more productive employees and a reduction of costs by mitigating the repercussions of the Cadillac tax.

The Cadillac tax is scheduled to take effect in 2018, so there’s ample time for those employers who have not already done so to begin health and wellness campaigns with their employees for both health and financial benefits.